Market data costs resisting reform, ESMA says

European regulators are launching a consultation on the cost of market data — and the apparent failure of recent reforms to curb those costs.

The European Securities and Markets Authority (ESMA) said that one of the objectives of recent reforms, known as MiFID II/MiFIR, was to ensure fair access to equity market data, and lower the costs of that data.

Yet, it reported that its analysis shows that, so far, MiFID II has “not delivered on its objective to lower the prices of market data.”

It noted that, according to users of market data, prices for data are too high and have not decreased since the reforms took effect in January 2018.

In some cases, prices have significantly increased, it said. New market data fees have also emerged, it noted, such as fees for data used for risk management and market abuse monitoring.

“Discussions on the cost of market data in the EU have been to the fore for many years with differing views expressed by trading venues selling this data and market data users buying it — MiFID II aims to change this landscape,” Steven Maijoor, chair of the ESMA, said in a statement. “This new consultation forms an important part of the reviews of MiFID II as we assess developments in this area.”

Additionally, the ESMA said that the reforms have not resulted in the development of a consolidated tape for equity instruments, despite the benefits this sort of initiative is expected to bring, such as improved post-trade transparency.

The regulator identified a number of challenges to developing a consolidated tape, including the lack of commercial rewards, a restrictive regulatory framework and competition from non-regulated entities.

“Establishing a consolidated tape in the EU has been discussed for many years. I believe it is time to decide if and how we want to go ahead with this ambitious project and ESMA is ready to provide support to the co-legislators on the right way forward,” Maijoor added.

The consultation closes on Sept. 6. The ESMA plans to publish a final review report in December.